Jeff Feinstein, Co-Founder and Managing Partner of Pinnacle Partners, and Mollie Fadule, Chief Financial and Investment Officer, of JPI, joined Keith Black, Managing Director of RIA Channel, to discuss compelling demographic and supply trends supporting investment in workforce and affordable housing.
Pinnacle Partners has been a pioneer in the investment in development projects in opportunity zones, facilitating more than $1 billion of real estate investments in affordable and workforce housing. JPI is a 35-year-old development and construction company dedicated to transforming, building, and enhancing communities while improving lives. JPI has built over 118,000 multi-family homes valued at over $26 billion.
Workforce housing encompasses both income-restricted and affordable market-rate units designed for families that earn between 60% and 150% of an area’s median income. These units play a vital role in keeping essential workers, such as teachers, public safety officers, healthcare professionals, and service workers within communities that are increasingly challenged with housing affordability.
The Workforce Housing Fund is purpose-built for investment through RIA firms, featuring built-in solutions for audits, custody, and compliance. Targeting a net IRR of 16% on a $200 million fund, it is anchored by 4 shovel ready or in progress projects with guaranteed maximum price contracts executed or ready for execution in Washington, California, and Texas. JPI selected these markets from an analysis of the top 50 metropolitan statistical areas (MSAs), focusing on regions with strong job growth and increasing housing affordability challenges. Additionally, municipal support in the form of tax or other incentives enhance each project’s feasibility.
While a record supply of multifamily housing was built during the low-interest-rate environment, absorption rates have exceeded expectations. With housing starts having declined in the higher interest rate environment, the demand for affordable housing continues to rise.
Workforce housing has never been more critical than it is today, as the United States faces a staggering shortage of over 4.9 million homes, which disproportionately impacts low and middle-income families. In high-growth metropolitan areas, decades of underbuilding and continued strong job creation and population expansion, have driven up housing costs. For the backbone of our communities—teachers, healthcare professionals, first responders, and service industry workers—access to safe, affordable housing is essential for sustaining community stability and workforce productivity. Research indicates that 40% of workers earning between $45,000 and $75,000 are cost-burdened, spending over 30% of their income on housing, which undercuts their financial security and quality of life. This crisis presents an opportunity for investors to step in with resilient, income-restricted housing solutions that not only alleviate this pressing social issue but also deliver attractive, risk-adjusted returns. By targeting workforce housing, investors can capitalize on a market with durable demand and lower turnover rates, while also benefiting from annual lease adjustments that help hedge against inflation. Moreover, limited new supply driven by increased interest rates and rising development costs has led to a significant reduction in multifamily construction starts (a decline of more than 30% over the past two years). Now is an opportune time to invest in new projects that will take full advantage of this continued supply-demand imbalance and meet the critical needs of our communities.
Prior to the fund’s official launch, JPI deployed its own capital to bring these projects to a shovel-ready status, with construction underway on the first of the four projects. The entitlement and permitting processes have been de-risked and the land has already been purchased or optioned, allowing investors the opportunity to perform due diligence and underwrite each of these 4 seed assets in the fund.
Resources:
Workforce Housing Fund Details